The "Feed Resource Recovery" case study discusses the start-up project of Shane Eten on managing food waste. It tackles how Shane needed to raise some capital to develop a prototype and prove his concept. It provides reasons as to why venture capitalists must be interested in the start-up.
Andrew Zacharakis; Reuben Zacharakis-Jutz
Harvard Business Review (BAB156-PDF-ENG)
May 01, 2009
Case questions answered:
- What is your assessment of the business for the short and long term? Please be specific and state your reasoning.
- Please give 3 reasons as to why venture capitalists are interested in the overall sector.
- If you were a venture capitalist, would you invest now in Feed Resource Recovery? Why or Why Not? What would change your mind?
- Whom should Shane and Ryan approach for financing and how would you prioritize the order between family & friends, angels, the government, customers, and others you can think of?
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Case answers for Feed Resource Recovery
Assessment of the Business from Short-Term Perspective
From a short-term perspective, Biospan is one of the best investments, a cleantech industry has to offer. Since the R2 system, a mobile anaerobic digestion system is an introduction to new innovative technology, the company can quickly grab the market with this invention. It can target small and middle-level consumers such as households, groceries, supermarkets, and food processing plants. Although more investment is needed to build the prototype the investment can be quickly realized from the potential growth in sales of this system.
Assessment of the Business from a Long-Term Perspective
While analyzing the business from a long-term perspective, Biospan does not seem to be quite good for investment. There has been a rapid growth in investment in the clean technology industry.
Further, the company has to compete with some of the large competitors like Converted Organics Inc., Carlyle Group, Bluefire Ethanol Inc., etc who are already well established in the market within this niche market of waste conversion technology in CleanTech industry.
The strong competition among companies in the industry may wipe out the profit from these companies leaving it to be unattractive in the future.
The interest of Venture Capitalists in Overall Sector
Venture capitalists are much interested in investing…